Shutdown is sand in the gears for key USDA crop report

The U.S. government shutdown has thwarted the formulation of the monthly USDA crop production report, sidelining the Department of Agriculture's corps of enumerators and almost certainly delaying the report due for release on Oct. 11.

Creation of the report, which affects prices of grains and other agricultural commodities around the world, starts at the farm level with two full weeks devoted to surveying growers and inspecting crops in thousands of fields.

The shutdown, now into its fourth day, comes smack in the middle of that process.

No decision on rescheduling will be made until the government is back at work, a USDA spokesman said hours before the shutdown began on Tuesday.

But analysts said USDA faces knotty decisions on how to proceed with the report whenever the shutdown ends. In the meantime, analysts point to the rising risk traders face as they operate without the government data they rely on for price direction.

USDA officials said privately they would have to consider a new release date if the shutdown lasted more than two days, because there is little leeway to absorb lost work time.

"It's a tight schedule," said one official. The crop report normally is released three or four days after data collection ends, not counting weekends.

A lengthy shutdown could erode the value of the field data USDA already has in hand or make it difficult to reconcile it with information gathered later, especially with the fall harvest powering ahead. If USDA is off-line until mid-month, there could be a debate whether to issue an October report at all.

In the interim, commodity prices will be shaped by crop forecasts from private companies or commissioned by the major processors and exporters. Spotty reports of yields in various parts of the Farm Belt will circulate on the Internet too.

"The market is going to use that - what else do they have to trade on?" asked Bob Young of the American Farm Bureau Federation.

"It will leave a bit of a hole" if USDA is late in issuing the October coop report or even scraps it, said Pat Westhoff, head of an agricultural think tank at the University of Missouri. "It's getting later by the hour."

THOUSANDS OF DATA GATHERERS

Corn and soybeans, the two leading U.S. crops, are maturing later than usual this year, meaning the October crop report, with harvest just getting under way, could carry even more significance than usual.

For the October report USDA routinely contacts around 14,400 farmers, mostly by telephone but also by mail, Internet and face-to-face meetings, over a two-week period straddling the first of the month.

Its enumerators also inspect hundreds of production plots in the major farm states, drawn from 9,900 sites identified nationwide for visits throughout the growing season and harvest.

Growers are asked each month about their expectations for yields and, later, about actual harvested yields. The field inspections are used in USDA's "objective yield" estimates. Enumerators also tally plant population, the number of soybean pods or ears of corn per stalk, and the weight of pods and ears of corn.

Some 3,400 enumerators, mostly retirees, work part-time across the nation to gather data for USDA under a contract with the National Association of State Departments of Agriculture (NASDA). USDA and the state agencies have overlapping interests in agricultural statistics and routinely cooperate in gathering agricultural data.

Once collected, the data for each state is sent in code to USDA's headquarters in Washington where analysts aggregate it during a marathon "lockup" session into a national report that is released almost immediately upon completion.

The U.S. production figures are also incorporated into a companion report, World Agricultural Supply and Demand Estimates (WASDE), which pools resources from across various USDA agencies to estimate balance sheets for major crops around the world.

Frequently, analysts race the clock and finalize the report, with its thousands of data points, only hours before the deadline for release.

It is a point of pride for USDA statisticians and analysts, who guard their independence to produce unbiased estimates, that the agriculture secretary, a political appointee, approves the reports for release before seeing their contents.

"IN A FUNDAMENTAL VOID"

A former USDA official, Bill Tierney, now chief economist at AgResource Co in Chicago, wondered if USDA might go ahead with WASDE, the companion report, if the crop report is delayed. WASDE could be assembled fairly quickly, he said.

The crop report and WASDE are the best-known of USDA reports affected by the shutdown, but others are important too. Already, USDA has missed a weekly report on farm exports, issued each Thursday, which is valuable for tracking global demand.

Meanwhile, a weekly report from the Commodity Futures Trading Commission, which shows traders' positions in U.S. futures markets, will not be issued as scheduled on Friday.

"Not having export sales, not seeing harvest updates, not having the CFTC report, leaves us in a fundamental void, hence higher risk," said Rich Feltes, vice president of commodity research for brokerage R.J. O'Brien. (Reporting by Charles Abbott; editing by Ros Krasny and Jim Marshall)